The platinum coin is killed as America careens toward default

The platinum coin is dead, long live the debt ceiling.

On Saturday evening, the Washington Post's Ezra Klein dropped a bombshell: The platinum coin gambit – the plan to circumvent the American debt ceiling by minting a trillion-dollar coin and depositing it in the Federal Reserve – is dead. Klein writes:

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” he said.

The Treasury's take on the law is one thing; but the Federal Reserve, as a quasi-independent body, is really what's put the kibosh on the whole plan. If it doesn't believe that using a platinum coin to circumvent the debt limit would be legal, that's it. The lynchpin of the plan was that the Treasury, after using powers granted to it through a loophole in a law intended to let it mint commemorative coins for collectors, would be able to deposit the coin in its account in the Fed. If the Fed won't take it, the plan's bust.

Joe Weisenthal, the most consistent advocate of the platinum coin, points out that it's hard to work out what point of law the Fed was actually trying to apply here:

It seems odd that the Fed would decide that there's some legal tender that it will recognize, and some legal tender that it wouldn't recognize.

Paul Krugman, who became a high-profile advocate of minting the coin last week, asks what the administration's plan is now, but also somewhat unfairly places the blame on Obama. Given the White House's comment to Buzzfeed focuses on the Fed, it seems like they weren't exactly behind the move to pre-emptively remove the bargaining chip from the table.

Regardless, the administration's position now is clear. The debt ceiling must be lifted, and they will offer no "concessions" to do so. With the platinum coin out of the equation – and with the so-called "constitutional option", where the President cites the 14th amendment's command that the validity of the public debt "shall not be questioned" and ignores the debt ceiling, ruled out by the White House last month – the Republicans can be under no illusions that if they fail to concede, America will definitely have a messy government shutdown, and will likely enter technical default on its public debt. The only question that they have to answer is whether they have an ounce of rationality left, or if they'll take the whole system down, themselves included.

Past experience suggests that the latter is worryingly possible. For one thing, conservative economists like John Cochrane have been minimising the effect of hitting the ceiling. Cochrane casts doubt on possibility of default by rightly pointing out that the Treasury has enough income to make debt repayments even if the ceiling is hit. But by ignoring the practical aspects of hitting the ceiling, he bypasses an important point. The treasury pays its bills with a vastly complex, automated system. It is not clear it has the technology to "prioritise" debt repayments, nor is it clear that to do so would be legal.

And even worse, those GOP members who do understand the likelihood of a default aren't too concerned. Politico's Jim Vandehei, Mike Allen and Jake Sherman write:

GOP officials said more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes…

“For too long, the pitch was, we’ll deal with it next time,” said Rep. Jason Chaffetz, a conservative from Utah. He said GOP lawmakers are prepared to shut things down or even default if Obama doesn’t bend on spending. “No one wants to default, but we are not going to continue to give the president a limitless credit card.”

If the US did default on its debt – even just by paying a coupon a day late – the international knock-on effects would be massive, and unprecedented. Now that every option for preventing that has been taken off the table save for negotiating with the most radical congress ever, the financial community may start to take note.

Photograph: Wikimedia Commons

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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In praise of the late developer

The success of late developers proves that our obsession with early achievement is wrong.

A fortnight ago, I fell into conversation with the head teacher of a local school. “You’ve got to create room for late developers,” he said. “The obsession with early attainment doesn’t suit most children.”

We were soon finishing each other’s sentences – talking about long-term confidence rather than short-term hothousing, how children don’t develop in a linear way, and the value of having transferable skills rather than a single focus from a young age.

What a shame, I reflected, that his message doesn’t reach a wider audience. We hear so much about prodigies and precociousness – Serena Williams and her pushy father, Tiger Woods and “tiger mothers” – and so little of the counter-argument: the high achievers who emerge at a slower pace in more balanced circumstances.

Our conversation ended when we both departed to watch England play Scotland in the Six Nations tournament. Only then did I learn that the head teacher’s son Huw Jones was playing in the centre for Scotland. He scored two tries, just as he did last autumn in his home debut against Australia.

Jones’s career is a tacit endorsement of his father’s philosophy. In his penultimate year at school, Huw was still playing mostly in the second XV. Five years on, he is a burgeoning talent on the world stage. The two facts are connected. Jones didn’t just overtake others; he also retained the naturalness that is often lost “in the system”.

As boys, he and his brother made up their own version of rugby practice: could the ­attacker sidestep and run past the defender without setting foot outside the five-metre line? They were just having fun, uncoached and unsupervised. But their one-on-one game was teaching the most valuable skill in rugby: the ability to beat defenders in confined spaces.

Jones had access to superb opportunities throughout – at home, at Canterbury rugby club and then at Millfield, the independent school in Somerset well known for producing sportsmen. But at Millfield, he was far from being a superstar. He seldom played “A-team” rugby. The message from home: just keep enjoying it and getting better and eventually your time will come.

There was a useful precedent. Matt Perry, who won 36 caps for England between 1997 and 2001, had been a “B-team” player at school. What matters is where you end up, not who leads the race at the age of 16. Jones also developed transferable skills by continuing to play other sports. “Don’t specialise too early,” was the mantra of Richard Ellison, the former England cricketer who taught at Millfield for many years.

When Jones was 18 and finally blossoming in the school’s first XV, rugby agents started to take an interest, promising to place him in the “academy” of a professional team. “But I’d seen so many kids take that route and seen how bored they got,” his father, Bill, reflects. So Bill advised his son to go abroad, to gain experience of new cultures and to keep playing rugby for fun instead of getting on the tracksuited professional treadmill.

So Jones took a teaching job in Cape Town, where he played men’s club rugby. Instead of entering the professional system, as one of a bland cohort of similar-aged “prospects”, he served his apprenticeship among players drawn from different backgrounds and ages. Sport was shown to be a matter of friendship and community, not just a career path.

The University of Cape Town spotted and recruited Jones, who helped it win the South African university competition. Only then, in 2014, did British professional rugby teams start to take a serious interest. Jones, however, was enjoying South Africa and stayed put, signing a contract with the Stormers in the Super Rugby tournament – the world’s leading club competition.

So, in the space of 18 months, Jones had gone from being a gap-year Brit with no formal ties to professional rugby to playing against the world’s best players each week. He had arrived on the big stage, following a trajectory that suited him.

The level of competition had escalated rapidly but the tries kept coming. Scotland, by now closely monitoring a player qualified by birth, gave him his spectacular home debut against Australia last autumn – remarkable but not surprising. Finding his feet ­instantly on each new stage is the pattern of his career.

Those two qualities – first, instinctive ­try-scoring; second, a lack of vertigo – are connected. Amid all the jargon of professional sport, perhaps the most important qualities – freshness, ingenuity and the gift of surprise – are undervalued. Yet all of these rely on skills honed over many years – honed, but not dulled.

Shoehorning all young players into rigid, quasi-professional systems long before they are ready comes with risks. First, we seldom hear from the child prodigies who faded away (often damaged psychologically). Many players who are pushed too hard miss their natural learning arc; the narrative of their ambition, or the ambition imposed on them by parents, is often out of step with their physical and psychological growth. Second, systems have a habit of overestimating their contribution: they become blind to outsiders.

In a quiet way, Jones is a case study in evolved education and not just sport: a talented performer who was given time and space to find his voice. The more we learn about talent, as David Epstein demonstrated in The Sports Gene, the clearer it becomes that focusing on champion 11-year-olds decreases the odds of producing champion adults. Modern science has reinforced less frantic and neurotic educational values; variety and fun have their virtues.

Over the long term, put your faith not in battery farming but instead, in Bill Jones’s phrase, in “free-range children”.

Ed Smith is a journalist and author, most recently of Luck. He is a former professional cricketer and played for both Middlesex and England.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution